US Dominates Crypto Venture Capital Investments
Nearly half of all venture capital (VC) funding in the crypto sector during the fourth quarter of 2024 went to startups based in the US, according to Galaxy Digital’s Crypto and Blockchain Venture Capital report filed on January 15, 2025.
The report revealed that 46% of all capital invested globally was directed to US-headquartered firms, vastly outpacing Hong Kong, which secured the second spot with only 16% of the total share.
The US also led in the number of deals, accounting for 36% of all VC transactions, with Singapore and the UK following at 9% and 8%, respectively. These findings underscore the country's ongoing dominance in crypto innovation and financing, notwithstanding regulatory challenges.
US Crypto Dominance Linked to Established Financial Ecosystem
Ryan McMillin, co-founder and Chief Investment Officer at Merkle Tree Capital, attributed the US’s leadership to its established financial ecosystem and significant venture capital resources. He noted that optimism surrounding the anticipated administration of Donald Trump, known for his supportive stance on crypto, has spurred a surge in investments.
“There are simply more venture capitalists and limited partners located in the US. The 46% quarter-on-quarter increase for Q4 reflects capital deployment tied to the anticipation of a Trump administration,” McMillin said.
Trump’s inauguration on January 20, 2025, is expected to bring significant changes to the crypto landscape. Many pro-crypto candidates have also obtained seats in Congress, raising hopes that the US government might become the most crypto-friendly in its history.
Galaxy Digital’s Head of Research Alex Thorn and analyst Gabe Parker echoed this sentiment. In their report, they stated that despite challenges from a “hostile regulatory regime,” they expect that U.S. dominance will continue to strengthen under a supportive government.
CRYPTO VC TO REBOUND IN 2025?
Investors put $3.5bn (+46% QoQ) into crypto startups across 416 deals (-13% QoQ), the highest dollar amount since Q4 2022, making 2024 the third-largest year for crypto VC ever.
Regulatory Uncertainty Remains An Ongoing Challenge
However, regulatory uncertainty still poses a significant challenge. The Securities and Exchange Commission (SEC) has aggressively targeted crypto firms, with its November report revealing $8.2 billion in financial penalties for the fiscal year ending September 30. Yet, the number of enforcement actions has decreased by 26% from the previous year.
The SEC is facing leadership changes as Gensler announced his departure effective January 20 and Commissioner Jaime Lizárraga is also expected to leave before Trump’s inauguration.
Meanwhile, Trump has selected Paul Atkins, a crypto advocate and former SEC commissioner, as his nominee to lead the SEC. He has also appointed David Sachs, a podcaster, as the “Crypto Czar” in his cabinet, pledging to transform America into the “crypto capital of the world” through initiatives like World Liberty’s lending and borrowing platform.
